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September 14, 2013

Lawmakers poised to repeal tech tax

O'Connor Ives: New taxes not needed to replace anticipated revenue

(Continued)

“Business groups that supported this early on said they took another look at it and felt it could be damaging to the commonwealth’s reputation as an innovation center,” Haverhill state Rep. Brian Dempsey said. “They had underestimated this. Those groups said they were okay with it, and when they had discussions with their IT departments, that’s when new information and concerns were raised. We’re responding to that.”

It was only after the state budget had been finalized that business leaders began to speak out strongly against the tax, lawmakers said.

‘‘We in the business community underestimated the negative impacts of this tax,’’ Dan O’Connell, president of the Massachusetts Competitive Partnership, acknowledged at Thursday’s news conference.

The strongest opposition emerged from smaller software firms that said the tax was vague and confusing and could prompt them to shed jobs or send business to other states. Florida Gov. Rick Scott even used the tax in a pitch to woo Massachusetts businesses to relocate to his state.

Patrick and legislative leaders expressed concern that the controversy surrounding the new tax was creating a perception that Massachusetts had become a less friendly environment for innovative technology firms that had long been viewed as a pillar of strength for the state’s economy.

The Associated Press and State House News Service contributed to this report.

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